United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q Nevada 27-2094706 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition perio ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________ Commission File No. 000-54768 Loop Industries, Inc. Registrant's telephone number, including area code (450) 951-8555 Securities registered pu ...

Technology and Innovation - Loop Industries' Generation II (GEN II) technology has improved monomer yields and reduced costs by shifting from producing purified terephthalic acid (PTA) to dimethyl terephthalate (DMT), resulting in a more environmentally sustainable process[90] - The company believes its technology can deliver virgin-quality PET resin suitable for food-grade packaging, addressing the global plastic crisis[89] - Loop Industries' proprietary technology allows the use of waste PET plastic and polyester fiber from various sources, including ocean-recovered materials[101] - The Infinite Loop™ technology aims to produce PET plastic and polyester fiber from 100% recycled content, supporting the transition to a circular economy[115] - The GEN I technology portfolio has three issued U.S. patents expected to expire around July 2035, while the GEN II technology portfolio consists of multiple patent families with expiration dates extending to March 2040[100] Financial Performance - The net loss for the three-month period ended May 31, 2020, increased to $3.85 million, compared to a net loss of $3.55 million for the same period in 2019, primarily due to increased research and development expenses[121] - Research and development expenses for the three-month period ended May 31, 2020, amounted to $1.48 million, an increase of $0.48 million from $1.00 million in the same period in 2019[122] - The company reported a net decrease in cash of $6.21 million for the three months ended May 31, 2020, compared to an increase of $1.14 million in the same period of 2019[132] - The company had cash and cash equivalents of $27.51 million as of February 29, 2020, to finance ongoing operations and commercialization plans[126] - For the three months ended May 31, 2020, the company used $4.98 million in operating activities, an increase from $2.01 million in the same period of 2019, primarily due to a $1.87 million prepayment of insurance premiums and a $0.72 million variation in accounts payable[133] Investments and Joint Ventures - The company made capital investments of $394,403 in its industrial pilot plant during the quarter ended May 31, 2020[92] - Loop Industries is focusing on securing long-term supply agreements for feedstock to ensure continuous operation of its first joint venture facility with Indorama Ventures in Spartanburg, South Carolina[102] - Loop Industries has established a joint venture with Indorama to retrofit existing PET manufacturing facilities, aiming to meet the growing demand for sustainable Loop™ PET resin and polyester fiber[105] - The joint venture with Indorama will establish a facility in Spartanburg, South Carolina, with an initial capacity of 20,700 metric tons per year, which is planned to be doubled to 40,000 metric tons due to customer demand[106][107] - The company has secured multi-year supply agreements with major brands including Danone, PepsiCo, Coca-Cola, L'OCCITANE, and L'Oréal for 100% sustainable Loop™ PET resin[108] Debt and Financing - The company has a long-term debt obligation of $1,015,449 (CDN$1,400,000) related to the purchase of land and building for its pilot plant, with monthly payments of $4,231 (CDN$5,833) plus interest[129] - A financing facility from Investissement Québec covers 63.45% of eligible expenses for the expansion of the pilot plant, with a maximum of $3,336,476 (CDN$4,600,000) and a 36-month moratorium on repayments[130] - The company repaid $0.01 million of long-term debt during the three months ended May 31, 2020[136] Market and Demand - The global annual market demand for PET plastic and polyester fiber is nearly $130 billion, projected to exceed $160 billion by 2022[86] - Loop Industries aims to supply its Loop™ PET resin at a premium price due to commitments from global consumer brands to incorporate more recycled content into their packaging[100] - The company is studying markets in the U.S., Canada, EU, and Asia to evaluate the size and location of future facilities, identifying material loss to divert waste effectively[103] Risks - The company is exposed to foreign currency exchange risks due to operations in Canada and financing in U.S. dollars, which could materially affect its results of operations[142] - The company faces commodity price risks as the demand for recycled PET fluctuates with crude oil prices, impacting its market penetration[144] - The company is subject to raw material price risks, which could adversely affect its business and financial condition due to fluctuations in availability and costs[145] Operational Activities - The company invested $0.39 million in property, plant, and equipment during the three months ended May 31, 2020, compared to $0.50 million in the same period of 2019, mainly for upgrading its GEN II industrial pilot plant[134] - The net cash used in investing activities was $1.19 million for the three months ended May 31, 2020, compared to $0.99 million in 2019[132] - The company continues to invest in research and development, particularly in the implementation of its GEN II technology as it moves towards commercialization[133] - The company is exploring joint venture structures and financing alternatives to increase equity participation in the Spartanburg project, which is strategically important for sustainability[113]

United States Securities and Exchange Commission Washington, D.C. 20549 Loop Industries, Inc. (Exact name of Registrant as specified in its charter) Nevada 27-2094706 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 29, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________ Commission File No. 000-54768 Indicate by check mark ...

Technology and Innovation - Loop Industries' Generation II technology has improved monomer yields and reduced purification steps from 12 to 4, resulting in lower production costs[107] - Loop Industries' technology can utilize a wide range of waste materials, including ocean plastics, which are typically not accepted by other recyclers[127] - The Infinite Loop™ business model aims to supply global demand for 100% sustainable Loop™ PET plastic resin and polyester fiber, reducing logistics costs by locating facilities near feedstock sources[122] Production Capacity and Agreements - The joint venture with Indorama Ventures has increased the Spartanburg plant's capacity to 40,000 metric tons per year due to customer demand[118] - Loop Industries has contracted for the sale of the initial 20,700 metric tons expected output from the Spartanburg facility and is in discussions to contract the additional volume[119] - The expanded supply agreement with L'OCCITANE en Provence aims to transition to 100% sustainable PET plastic in all its bottles, utilizing Loop's sustainable PET resin[120] Financial Performance - For the three-month period ended November 30, 2019, the net loss increased by $0.94 million to $3.85 million compared to a net loss of $2.91 million for the same period in 2018[132] - Research and development expenses for the three-month period ended November 30, 2019 amounted to $1.28 million, an increase of $0.49 million from $0.79 million in the same period in 2018[133] - General and administrative expenses for the three-month period ended November 30, 2019 decreased by $0.14 million to $1.83 million compared to $1.97 million for the same period in 2018[134] - Total operating expenses for the nine-month period ended November 30, 2019 were $10.75 million, an increase of $0.77 million from $9.98 million in the same period in 2018[138] Cash Flow and Investments - As of November 30, 2019, the company had cash on hand of $35.5 million, following a capital raise of approximately $34.6 million from a registered direct offering[144] - The company reported net cash used in operating activities of $6.82 million for the nine months ended November 30, 2019, compared to $5.46 million for the same period in 2018[149] - The Company made investments of $1.7 million in property, plant, and equipment during the nine months ended November 30, 2019, compared to $1.4 million in the same period of 2018, primarily for upgrading its GEN II industrial pilot plant[151] - The Company raised net proceeds of $39.2 million through the sale of common stock during the nine months ended November 30, 2019[153] Financial Risks and Compliance - The Company is currently in a development stage with no revenues, relying on raising new equity and debt capital to finance ongoing operations[143] - As of November 30, 2019, the Company was in compliance with its financial covenants[154] - The Company had no off-balance sheet arrangements as of November 30, 2019[155] - The Company is exposed to foreign currency exchange risk due to operations in Canada, with significant operational costs in Canadian dollars[160] - Fluctuations in the U.S. dollar to Canadian dollar exchange rates could materially affect the Company's results of operations and cash position[161] Market Conditions - The plastics manufacturing industry is highly competitive, with the cost of manufacturing recycled PET potentially higher than virgin PET if crude oil prices decline[163] - The profitability of the Company depends on the availability and price fluctuations of raw materials, which could adversely affect financial results[164]

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________ Commission File No. 000-54768 Loop Industries, Inc. (Exact name of Registrant as specified in its charter) Nevada 27-2094706 (State or other j ...

Financial Performance - The net loss for the three-month period ended May 31, 2019, was $3.56 million, an increase of $0.03 million compared to the same period in 2018[136]. - Research and development expenses for the three-month period ended May 31, 2019, were $1.0 million, a decrease of $0.07 million from $1.07 million in the same period in 2018[137]. - General and administrative expenses for the three-month period ended May 31, 2019, amounted to $1.90 million, down from $2.36 million in the same period in 2018, representing a decrease of $0.46 million[138]. - Net cash used in operating activities was $2.1 million for the three months ended May 31, 2019, compared to $2.2 million for the same period in 2018, reflecting a decrease of approximately 5.0%[146]. - The company had cash on hand of $7.0 million and raised approximately $34.6 million from a registered direct offering as of May 31, 2019[143]. - The company has a long-term debt obligation of CDN$1,400,000 related to the purchase of land and building for its pilot plant and corporate offices[144]. Investment and Joint Ventures - Loop Industries reported a capital asset investment of $943,891 during the three months ended May 31, 2019[110]. - The joint venture with Indorama Ventures Limited (IVL) aims to establish a facility with a production capacity of 20,700 metric tonnes of sustainable Loop™ PET plastic resin, fully subscribed by customers including Danone, PepsiCo, and Coca-Cola[115]. - The joint venture is evaluating increasing the facility's capacity to 40,000 metric tonnes, which may require an additional equity contribution of $15 million to $20 million from Loop Industries[119]. - The company made an initial contribution of $500,000 to Indorama Loop Technologies, LLC, a joint venture with Indorama Ventures Holdings LP, USA[148]. - The company entered into a Global Alliance Agreement with Thyssenkrupp Industrial Solutions in December 2018 to develop a fully integrated manufacturing facility for sustainable Loop™ PET plastic resin and polyester fiber[121]. Technology and Innovation - The Generation II technology is expected to be more cost-effective and environmentally sustainable, requiring less energy and fewer resources compared to conventional PET production processes[108]. - The Generation I technology portfolio includes two issued U.S. patents and a pending application expected to expire around July 2035, while the Generation II technology has an issued U.S. patent expected to expire around September 2037[116]. - The company aims to create a highly scalable recurring revenue licensing model for 100% sustainable Loop™ PET plastic resin and polyester fiber, transforming the plastic market[122]. - Loop Industries' technology diverts plastic waste from landfills and oceans, creating sustainable Loop™ PET plastic resin suitable for food-grade packaging[104]. Market and Demand - The global annual market demand for PET plastic and polyester fiber is nearly $130 billion, projected to exceed $160 billion by 2022[102]. - During the fiscal year 2019, the company announced multi-year supply agreements with major brands including Danone, PepsiCo, and Coca-Cola for sustainable Loop™ PET plastic resin[125][126]. Operational Challenges - The company is in the process of obtaining necessary permits and approvals for its operations, which may affect operational costs[112]. - The company is focused on securing long-term feedstock supply agreements to ensure continuous operation of its planned facilities[129]. - The company is exposed to foreign exchange risk due to operations in Canada, with significant operational costs denominated in Canadian dollars while financing is primarily in U.S. dollars[155]. - Significant fluctuations in the U.S. dollar to Canadian dollar exchange rates could materially affect the company's results of operations and cash position[156]. - The company faces commodity price risk as the demand for recycled PET is correlated with crude oil prices, which can impact manufacturing costs[158]. - Raw material prices are subject to fluctuations, which could adversely affect the company's profitability and operational results[159]. Strategic Partnerships - The company has secured key partners such as Thyssenkrupp Industrial Solutions to support its growth strategy[116]. - The company plans to continue investing in R&D and enhancing its Loop brand value through strategic relationships and innovation[133].

Financial Performance - Loop Industries reported a net loss of $7.5 million for the three-month period ended February 28, 2019, an increase of $3.9 million compared to a net loss of $3.6 million for the same period in 2018[138]. - The company incurred a net loss of $17.5 million for the year ended February 28, 2019, compared to a loss of $6.4 million in the previous year, indicating a significant increase in losses[154]. - Cash on hand as of February 28, 2019, was $5.8 million, with an additional $4.2 million raised through a registered direct offering on March 1, 2019[152]. - Net cash used in operating activities was $7.6 million for the year ended February 28, 2019, up from $6.4 million in the previous year, reflecting increased operating expenses[157]. - The accumulated deficit as of February 28, 2019, was $38.8 million, raising concerns about the company's ability to continue as a going concern[154]. Operating Expenses - Total operating expenses for the year ended February 28, 2019 were $17.5 million, an increase of $3.5 million from $14.0 million in 2018, primarily due to higher general and administrative expenses[146]. - General and administrative expenses for the year ended February 28, 2019 totaled $12.9 million, an increase of $6.0 million from $6.9 million in 2018, largely due to a legal settlement expense of $4.0 million[148]. - The increase in interest and other finance costs for the three-month period ended February 28, 2019 was $0.4 million, primarily due to expenses related to convertible notes issued during the year[142]. - Interest and other finance costs for the year ended February 28, 2019, totaled $0.5 million, a significant increase from a negligible amount in the previous year, primarily due to increased interest on long-term debt[150]. Research and Development - Research and development expenses decreased to $3.5 million for the year ended February 28, 2019, down from $6.7 million in 2018, representing a decrease of $3.2 million[147]. - The company plans to continue investing in its intellectual property portfolio and enhancing its Loop brand value through strategic relationships and R&D[135]. Joint Venture and Production - The joint venture with Indorama Ventures is expected to produce 20,700 metric tonnes of sustainable Loop™ PET plastic resin, with potential capacity expansion to 40,000 metric tonnes under evaluation[128]. - Loop Industries anticipates recording its first commercial revenues from the joint venture in the second half of the calendar year 2020[132]. - The company has committed $500,000 to the joint venture as part of its equity share for the construction of the facility[128]. - The Loop™ PET plastic resin and polyester fiber are made from 100% recycled materials, suitable for food-grade packaging, addressing consumer brands' sustainability challenges[134]. Capital Investments and Financing - Capital asset investments for the year ended February 28, 2019, totaled $2.1 million, primarily for the expansion of the pilot plant and development of the GEN II technology[158]. - The company raised $7.3 million through the issuance of convertible notes during the year ended February 28, 2019, compared to $15.7 million raised in the previous year[159]. - As of February 28, 2019, the company had a long-term debt obligation of CDN$1.4 million related to the purchase of land and building for its pilot plant[155]. Corporate Strategy - The company plans to continue executing its corporate strategy, focusing on raising sufficient funds, protecting intellectual property, and upgrading the pilot plant[166]. Currency and Financial Reporting - The company has not engaged in any currency hedging activities, which may expose it to foreign currency exchange fluctuations impacting operating expenses[185]. - The consolidated financial statements are presented in U.S. dollars, with foreign subsidiaries' assets and liabilities translated at the exchange rate as of the balance sheet date[183]. - The average period Canadian dollar to U.S. dollar exchange rate for 2019 was 0.76, consistent with the previous year[186].

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [ITEM 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Loop Industries' unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased, while total liabilities significantly increased, driven by reduced cash and new convertible notes | Metric | Nov 30, 2018 | Feb 28, 2018 | | :-------------------------------- | :----------- | :----------- | | Cash | $3,528,258 | $8,149,713 | | Total Assets | $9,428,530 | $13,395,563 | | Total Liabilities | $6,126,960 | $3,071,498 | | Convertible notes | $2,450,000 | - | | Total Stockholders' Equity | $3,301,570 | $10,324,065 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported no revenue, with net loss decreasing for both three and nine-month periods due to reduced research and development expenses | Metric | 3 Months Ended Nov 30, 2018 | 3 Months Ended Nov 30, 2017 | 9 Months Ended Nov 30, 2018 | 9 Months Ended Nov 30, 2017 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $ - | $ - | $ - | $ - | | Net Loss | $(2,913,761) | $(6,703,653) | $(9,981,702) | $(10,402,707) | | Research and development | $792,111 | $3,894,454 | $2,924,483 | $5,341,763 | | Loss per share (Basic and Diluted) | $(0.09) | $(0.20) | $(0.30) | $(0.32) | [Condensed Consolidated Statement of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity significantly decreased due to net loss and foreign currency adjustments, partially offset by increases in additional paid-in capital from warrants and RSUs | Metric | Nov 30, 2018 | Feb 28, 2018 | | :------------------------- | :----------- | :----------- | | Total Stockholders' Equity | $3,301,570 | $10,324,065 | | Accumulated Deficit | $(31,256,883) | $(21,275,181) | | Additional Paid-in Capital | $34,127,010 | $30,964,970 | - Net loss for the nine months ended November 30, 2018, was **$(9.98 million)**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash and restricted cash decreased, primarily due to significant cash usage in operating and investing activities, partially offset by financing activities from convertible debt sales | Cash Flow Activity | 9 Months Ended Nov 30, 2018 | 9 Months Ended Nov 30, 2017 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(5,455,317) | $(4,175,443) | | Net cash used in investing activities | $(1,523,353) | $(273,550) | | Net cash provided by financing activities | $2,510,529 | $7,022,801 | | Net change in cash and restricted cash | $(4,521,455) | $2,523,281 | | Cash and restricted cash, end of period | $3,628,258 | $3,439,768 | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's nature, accounting policies, financial instruments, and significant transactions, including going concern status, recent pronouncements, and specific financial items [Note 1. Nature of the Company, Basis of Presentation and Going Concern](index=10&type=section&id=Note%201.%20Nature%20of%20the%20Company,%20Basis%20of%20Presentation%20and%20Going%20Concern) This note describes Loop Industries' business of depolymerizing waste plastic, its pre-revenue status, accumulated deficit, and going concern risks due to significant cash usage - Loop Industries is a technology company focused on depolymerizing waste polyester plastic into virgin-quality plastic for food-grade packaging[21](index=21&type=chunk) - The company is pre-revenue with an accumulated deficit of **$31.3 million**, incurred a **$10.0 million** net loss, and used **$5.5 million** cash in operations, raising substantial doubt about its going concern ability[24](index=24&type=chunk) - As of November 30, 2018, the company had **$3.5 million** cash on hand and relies on new equity capital for operations and commercialization, with no assurance of future financing[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's significant accounting policies, including its reporting currency, research and development expense recognition, and the impact of recent accounting pronouncements - The company's financial statements are presented in **U.S. dollars**, its reporting currency[29](index=29&type=chunk) | Expense Category | 3 Months Ended Nov 30, 2018 | 3 Months Ended Nov 30, 2017 | 9 Months Ended Nov 30, 2018 | 9 Months Ended Nov 30, 2017 | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $0.8 million | $3.9 million | $2.9 million | $5.3 million | - Recently adopted accounting pronouncements (ASU 2014-09, ASU 2016-01, ASU 2017-09) had no material impact, and recently issued pronouncements (ASU 2018-02, ASU 2018-07, ASU 2018-09) are not expected to have a material impact[35](index=35&type=chunk)[36](index=36&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [Note 3. Property, Plant and Equipment, Net](index=14&type=section&id=Note%203.%20Property,%20Plant%20and%20Equipment,%20Net) This note details the company's property, plant, and equipment, including machinery and equipment values and associated depreciation expenses | Asset Category | Nov 30, 2018 | Feb 28, 2018 | | :----------------------------- | :----------- | :----------- | | Property, plant and equipment, net | $5,033,774 | $4,036,903 | | Machinery and equipment | $3,380,317 | $2,189,195 | | Depreciation expense (9 months) | $309,000 | $233,000 | [Note 4. Intangible Assets, Net](index=14&type=section&id=Note%204.%20Intangible%20Assets,%20Net) This note provides information on the company's intangible assets and their associated amortization expenses | Asset Category | Nov 30, 2018 | Feb 28, 2018 | | :--------------------- | :----------- | :----------- | | Intangible assets, net | $404,667 | $332,740 | | Amortization expense (9 months) | $58,000 | $48,000 | [Note 5. Long-Term Debt](index=14&type=section&id=Note%205.%20Long-Term%20Debt) This note details the non-current portion of the company's long-term debt and interest paid during the period | Debt Category | Nov 30, 2018 | Feb 28, 2018 | | :-------------------- | :----------- | :----------- | | Non-current portion | $956,069 | $1,033,777 | | Interest paid (9 months) | $41,117 | $0 | [Note 6. Related Party Transactions](index=14&type=section&id=Note%206.%20Related%20Party%20Transactions) This note describes related party transactions, including the CEO's compensation expense and a long-term incentive grant of restricted stock units - The CEO's compensation expense for the nine months ended November 30, 2018, increased to **$522,000** from **$135,000** in the prior year due to an amended employment agreement[49](index=49&type=chunk) - A long-term incentive grant of **4 million** restricted stock units (RSUs) was provided to the CEO, with one of four performance milestones met, but no compensation expense was recorded as vesting was not probable[50](index=50&type=chunk) [Note 7. Stockholders' Equity](index=15&type=section&id=Note%207.%20Stockholders'%20Equity) This note details changes in common stock outstanding, shares issued from warrant exercises and RSU vesting, and capital raised from stock sales | Metric | Nov 30, 2018 | Feb 28, 2018 | | :-------------------------------- | :----------- | :----------- | | Common Stock Outstanding (shares) | 33,805,706 | 33,751,088 | | Shares issued upon cashless exercise of warrants (9 months 2018) | 18,821 | - | | Shares issued upon vesting of restricted stock units (9 months 2018) | 35,797 | - | - During the nine months ended November 30, 2017, the company raised **$7.28 million** from common stock sales through private placements and warrant exercises[52](index=52&type=chunk) [Note 8. Stock-based Compensation Plans](index=15&type=section&id=Note%208.%20Stock-based%20Compensation%20Plans) This note outlines shares available under the equity incentive plan, and details outstanding warrants, RSUs, and their associated expenses - As of November 30, 2018, **3,271,496 shares** were available for issuance under the 2017 Equity Incentive Plan[54](index=54&type=chunk) | Metric | Nov 30, 2018 | Nov 30, 2017 | | :-------------------------------- | :----------- | :----------- | | Warrants Outstanding | 2,345,957 | 2,684,582 | | Weighted average exercise price | $8.44 | $7.16 | | Warrant expense (9 months) | $2.6 million | $5.2 million | | Restricted Stock Units (RSUs) Outstanding | 99,498 | 34,102 | | RSU expense (9 months) | $0.6 million | $0.1 million | [Note 9. Convertible notes](index=18&type=section&id=Note%209.%20Convertible%20notes) This note details the issuance of **$2.45 million** in convertible promissory notes, their conversion terms, and classification as a liability and derivative liability - On November 13, 2018, the company issued **$2.45 million** in convertible promissory notes with an **8.00%** annual interest rate, maturing on May 13, 2019[58](index=58&type=chunk)[59](index=59&type=chunk) - The notes automatically convert into common stock at the lesser of **$13.00** or the 10-day average closing price, with related warrants issued to acquire an additional **50%** of converted shares at a variable exercise price[59](index=59&type=chunk)[60](index=60&type=chunk) - Due to variable conversion terms, the notes are classified as a liability at amortized cost, and the warrants as a derivative liability measured at fair value[61](index=61&type=chunk)[62](index=62&type=chunk) [Note 10. Joint venture](index=19&type=section&id=Note%2010.%20Joint%20venture) This note details the formation of Indorama Loop Technologies, LLC, a 50:50 joint venture with Indorama Holdings LP, and agreements with PepsiCo for Loop™ PET resin supply - Loop Industries formed a **50:50** joint venture, Indorama Loop Technologies, LLC (ILT), with Indorama Holdings LP, USA, on September 24, 2018, to manufacture Loop branded polyester resin[65](index=65&type=chunk)[66](index=66&type=chunk) - The company committed an initial capital contribution of **$0.5 million** and contributed an exclusive worldwide royalty-free license for its proprietary technology to ILT[66](index=66&type=chunk) - In October 2018, PepsiCo entered a multi-year agreement to purchase production capacity from the ILT facility and incorporate Loop™ PET resin into its product packaging by early 2020[67](index=67&type=chunk) [Note 11. Contingencies](index=19&type=section&id=Note%2011.%20Contingencies) This note addresses a legal claim seeking **2 million** shares of common stock and punitive damages, with management believing the case lacks merit - The company is defending a legal claim seeking **2 million** shares of common stock, punitive damages, and attorneys' fees for alleged breach of contract and promissory fraud, with trial delayed to May 8, 2019[68](index=68&type=chunk) - Management believes the case lacks merit and has not provided for any amounts, but an unfavorable outcome could lead to significant share dilution and legal fee reimbursement[68](index=68&type=chunk) [Note 12. Subsequent events](index=19&type=section&id=Note%2012.%20Subsequent%20events) This note reports the issuance of an additional **$0.2 million** in convertible promissory notes and related warrants in January 2019 - On January 3, 2019, the company issued an additional **$0.2 million** in convertible promissory notes and related warrants with identical characteristics to those described in Note 9[69](index=69&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results, highlighting its pre-revenue status, net losses, cash usage, going concern doubts, and strategic developments like Generation II technology and joint ventures [CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS](index=20&type=section&id=CAUTIONARY%20STATEMENTS%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, including commercialization, financing, and going concern, advising against undue reliance - Forward-looking statements cover market opportunity, strategies, capabilities, competition, expected activities, cash resources, regulatory compliance, future growth, market size, trends, and internal control effectiveness[72](index=72&type=chunk) - Risks include technology commercialization, partner relationships, intellectual property, financing needs, competition, regulatory compliance, CEO control, internal control weaknesses, and going concern ability[72](index=72&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company disclaims any obligation to revise them for future events or circumstances[75](index=75&type=chunk) [Introduction and Prospective Future Growth](index=20&type=section&id=Introduction%20and%20Prospective%20Future%20Growth) Loop Industries aims to accelerate sustainable plastic production, targeting a **$130 billion** global polyester market, with key developments including Generation II technology, a joint venture with IVL, and agreements with PepsiCo and Coca-Cola - Loop Industries aims to decouple plastic from fossil fuels by depolymerizing waste polyester into virgin-quality plastic for food-grade packaging[78](index=78&type=chunk) - The global polyester market is estimated at **70 million metric tons** (approximately **$130 billion**) and is expected to grow **4%** annually[79](index=79&type=chunk) - The company activated its Generation II technology in June 2018, which is more streamlined, energy-efficient, and eliminates water in dimethyl terephthalate production[81](index=81&type=chunk) - A **50:50** joint venture with Indorama Ventures Public Company Limited (IVL) was formed in September 2018 for sustainable polyester resin, with commercial production planned for Q1 2020[82](index=82&type=chunk) - Multi-year agreements were secured with PepsiCo (October 2018) and Coca-Cola (November 2018) to supply Loop™ PET resin for product packaging by early 2020[84](index=84&type=chunk)[85](index=85&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) The company reported no revenue, with net loss decreasing for both periods due to reduced R&D expenses, while G&A expenses showed mixed trends due to employee costs and legal fees | Metric | 3 Months Ended Nov 30, 2018 | 3 Months Ended Nov 30, 2017 | 9 Months Ended Nov 30, 2018 | 9 Months Ended Nov 30, 2017 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $ - | $ - | $ - | $ - | | Net Loss | $(2,913,761) | $(6,703,653) | $(9,981,702) | $(10,402,707) | | Research and development expenses | $792,111 | $3,894,454 | $2,924,483 | $5,341,763 | | General and administrative expenses | $1,971,847 | $2,720,078 | $6,721,796 | $4,691,294 | - The decrease in research and development expenses was primarily due to lower non-cash stock-based compensation and reduced engineering fees[93](index=93&type=chunk)[96](index=96&type=chunk) - The increase in general and administrative expenses for the nine-month period was mainly driven by higher employee-related costs, legal fees, and consulting/accounting fees[97](index=97&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=24&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As a pre-revenue company, Loop Industries had **$3.5 million** cash on hand, with significant cash usage in operations and investing, necessitating further financing due to going concern doubts - As of November 30, 2018, the company had **$3.5 million** cash on hand[98](index=98&type=chunk) | Cash Flow Activity | 9 Months Ended Nov 30, 2018 | 9 Months Ended Nov 30, 2017 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(5,455,317) | $(4,175,443) | | Net cash used in investing activities | $(1,523,353) | $(273,550) | | Net cash provided by financing activities | $2,510,529 | $7,022,801 | - The company's pre-revenue status, **$31.3 million** accumulated deficit, and significant cash usage in operations raise substantial doubt about its going concern ability, requiring additional financing[101](index=101&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) As of November 30, 2018, the company had no off-balance sheet arrangements - The company did not have any off-balance sheet arrangements as of November 30, 2018[106](index=106&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from foreign currency fluctuations between USD and CAD, which could adversely affect financial results and stock price, despite potential hedging activities [Foreign Currency Exchange Risk](index=25&type=section&id=Foreign%20Currency%20Exchange%20Risk) Loop Industries faces foreign currency exchange risk due to USD financing and CAD operational costs, where fluctuations could materially impact financial results, cash, and funding, despite potential hedging - The company is exposed to foreign exchange risk due to U.S. dollar financing and significant Canadian dollar operational costs of its subsidiary, Loop Canada Inc[109](index=109&type=chunk) - Significant fluctuations in USD to CAD exchange rates could materially affect the company's results, cash position, funding requirements, and stock price[110](index=110&type=chunk) - The company may engage in exchange rate hedging activities, such as foreign exchange forward contracts, but these involve costs and risks, and their effectiveness is not assured[111](index=111&type=chunk) [ITEM 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective, with the material weakness in stock-based compensation accounting remediated, and no other material changes occurred [Management's Evaluation of our Disclosure Controls and Procedures](index=26&type=section&id=Management's%20Evaluation%20of%20our%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective, and the material weakness in stock-based compensation accounting was remediated - The principal executive officer and principal financial officer concluded that disclosure controls and procedures and internal controls over financial reporting were effective as of November 30, 2018[113](index=113&type=chunk) - The previously reported material weakness in stock-based compensation accounting was remediated by expanding in-house expertise and engaging an external advisor[113](index=113&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No other material changes in internal control over financial reporting occurred during the most recent quarter - No other changes in internal control over financial reporting occurred during the most recent quarter that materially affected, or were reasonably likely to materially affect, the company's internal control over financial reporting[114](index=114&type=chunk) [PART II. Other Information](index=3&type=section&id=PART%20II.%20Other%20Information) [ITEM 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a legal claim seeking **2 million** shares, punitive damages, and attorneys' fees for alleged breach of contract, with trial set for May 8, 2019 - A claim was filed against the company seeking damages for breach of contract and promissory fraud, asserting entitlement to **2 million** shares of common stock[116](index=116&type=chunk) - The trial date has been delayed to May 8, 2019, in the Los Angeles Superior Court[116](index=116&type=chunk) - Management believes the case lacks merit, but an unfavorable outcome could lead to the issuance of **2 million** additional shares, causing dilution and legal fee reimbursement[116](index=116&type=chunk) [ITEM 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The primary risk factor is the company's going concern status, as current liquidity raises substantial doubt about its ability to continue operations without additional capital, potentially leading to investor losses - The company's consolidated financial statements include going concern disclosures, indicating substantial doubt about its ability to continue as a going concern due to current liquidity[120](index=120&type=chunk)[121](index=121&type=chunk) - To fund operations and continue as a going concern, the company must raise additional equity or debt capital, with no assurance of success[122](index=122&type=chunk) - The financial statements do not include adjustments that might result if the company is unable to continue as a going concern, which could cause investors to suffer substantial losses[121](index=121&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds to report[123](index=123&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - No defaults upon senior securities to report[124](index=124&type=chunk) [ITEM 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[125](index=125&type=chunk) [ITEM 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information to report[126](index=126&type=chunk) [ITEM 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including corporate documents, various agreements, and principal officer certifications - Exhibits include Articles of Incorporation, By-laws, employment agreements, joint venture agreements, license agreements, marketing agreements, and certifications (302 and 906)[129](index=129&type=chunk) [Signatures](index=29&type=section&id=Signatures) The report was signed on January 9, 2019, by Daniel Solomita (CEO, President, Director) and Nelson Gentiletti (COO, CFO) - The report was signed on January 9, 2019, by Daniel Solomita (Chief Executive Officer, President, and Director) and Nelson Gentiletti (Chief Operating Officer and Chief Financial Officer)[132](index=132&type=chunk)